WASHINGTON—The Pew Charitable Trusts expressed support today for a bill in the Massachusetts Legislature, saying the measure would help some 1.2 million workers secure a stronger financial future.
The Massachusetts Secure Choice Savings Program Act (H.998/S.624) would establish an automated savings program that would automatically enroll workers who lack access to a savings plan at work in an individual retirement account (IRA) in which a portion of their wages would be set aside every pay period.
Under the legislation, workers would be able to save through a standard rate or by customizing their savings to meet their needs. Workers would have full control of their contributions and investments, and they could opt out entirely, at any time. Meanwhile, at no cost to them, businesses registered in the program would be able to seamlessly enroll their employees. The program would be a public-private partnership, professionally managed by a private financial services firm with oversight by the commonwealth.
Fifteen states have passed similar laws, which are variously known as “auto-IRA,” “work and save,” and “secure choice”: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Vermont, and Virginia. Although some of the state programs are still in their infancy, more than 715,000 savers in the seven states with active programs have already amassed nearly $1 billion in assets since 2017.
John Scott, director of The Pew Charitable Trusts’ retirement savings project, issued the following statement:
“Americans want to build a secure retirement. Yet more than half of private sector workers in the U.S. work for an employer that’s unable to offer retirement benefits.
“Research shows that workers are 15 times more likely to save for retirement if they can use a payroll deduction. The Massachusetts Secure Choice Savings Program Act offers exactly that: It’s an innovative and practical solution, with no costs for employers, to address the challenges workers in Massachusetts face in this tightening economy. The act will also allow small businesses to compete with larger businesses to recruit and retain workers.
“When workers are financially secure, they’re less reliant on taxpayer-funded government programs, better able to withstand financial shocks, and more likely to save for their future. In fact, our research shows that closing the retirement savings gap in Massachusetts will save the commonwealth’s taxpayers more than $13 billion over 20 years.”
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Celebrating its 75th anniversary, The Pew Charitable Trusts uses data to make a difference. Pew addresses the challenges of a changing world by illuminating issues, creating common ground, and advancing ambitious projects that lead to tangible progress. Learn more at pewtrusts.org.